Recruitment Matters- November/December 2022

THE VIEW AND THE INTELLIGENCE

BIG TALKING POINT

Ma

Focus on the future

A manifesto for ‘growth growth growth’

Former Prime Minister Liz Truss was steadfast (for a few weeks) on her plans for growing the economy through radical tax cuts and the ‘sunse ng’ of EU legisla on. A few weeks on, and at the me of wri ng we have a new PM and a new Chancellor, and a u-turn on almost of all of the tax-cu ng proposals the previous Chancellor announced in his ‘mini-budget’. So much drama c poli cs in the pursuit of “growth growth growth”, as the (now former) PM put it in her speech to party conference. However, it doesn’t have to be as di cult as this. With poli cal change in the air – and sugges ons that there could be a general elec on sooner than 2024 – the REC has published its ‘Manifesto for Growth’ to guide the di fferent poli cal par es on what to include in the manifestos they intend to offer to the electorate. The document sets out four key requests.

1. Make sure the skills system encourages fi rms to invest more, not less: reform the Appren ceship Levy, create local delivery networks; and use a tax credit system to reward fi rms that do the right thing.

2. Create a Future Workforce Strategy, outlining the skills that the UK will need over the coming years. Use that to inform policy decisions that will boost economic growth.

3. Extend work visas to at least fi ve years and establish an immigra on route for entry-level skilled workers in

sectors with shortages. Immigra on should be seen as a tool to alleviate skills gaps, alongside boos ng growth and interna onal investment.

4. Ensure that employment laws re ect modern ways of working and are effec ve at protec ng workers. The government has published the Retained EU Law Bill as a mechanism for replacing EU legisla on. New laws should deliver clarity for employers and fairness for employees. This test should apply to all new regula ons, and we should review and update current legisla on where necessary. The REC will set out its view on legisla ng for our industry shortly.

The UK jobs market is at a cri cal point and it has never ma ered more to our shared prosperity. Labour shortages, rising in a on, economic uncertainty and interna onal supply chain issues all play a part in this. This manifesto sets out policy measures that any government could take to enhance UK investment, boost produc vity and promote economic growth.

Leading the industry

the view...

It’s become a cliché to say the mes we live in are unprecedented. But things become clichés because they are rooted in truth. This autumn, we con nue to deal with the effects of con ict in Ukraine and central Asia, supply chain issues caused by Covid and in a on spreading from energy prices to the rest of the economy.

In this context, a steady hand on the ller is essen al for businesses and governments alike. The much-hyped ‘mini-Budget’ didn’t exactly achieve this, although, as I am wri ng this, policy changes and interven ons from the Bank of England appear to have calmed things down, and the interven on on energy prices will help to reduce the speed of any immediate slowdown.

For us as recruiters and sta ng professionals, economic turbulence usually means a quieter market. Yet the data we see remains remarkably robust. Growth is certainly slowing from the post-pandemic sugar rush, but the market remains strong.

The big ques on is why. Falling consumer confidence might be making candidates wary of moving jobs before it affects clients, but it is more than that. The scale of the shortage of labour in the UK means that serious commentators are star ng to speculate that the jobs market may be decoupled from the economy because the supply of labour is so scarce.

That raises an interes ng paradox for recruiters. On the one hand, it means there is a more posi ve market and candidate journeys remain key. On the other, it creates a client base that, while it s ll needs to hire, is facing a tough market. Businesses are changing fast and their skills needs are changing with them.

As I set out at my recent presenta on at the Recruitment Agency Expo, this is where recruiters can make a difference. Successful firms and professionals can square this circle for clients by adding value in new ways and delivering excellent candidate care. They can offer the trusted advice of someone who has a map of a di cult maze. It’s a harder market for clients to hire in –that is why they need us.

If you want to keep up to speed with all things recruitment then follow me on Twi er @RECNeil

CAMPAIGNS

We need poli cal clarity and regional input in skills policies

Shazia Ejaz, Director of Campaigns at the REC

Within 49 days of her premiership, Liz Truss’s government had certainly made an impact –although not exactly as they planned. On 23 September, the former Chancellor delivered his not-so mini, and highly conten ous, budget. Just over three weeks later, a new Chancellor with a new fiscal plan undid almost everything previously announced. Now we have a new PM and, at the me of wri ng, we are wai ng for further clarity. At present, it seems that the basic rate of income tax will remain at 20p. Cuts to stamp duty and Na onal Insurance are the only tax measures from September’s fiscal plan that remain. The cap on energy prices for households is now guaranteed only un l April next year and the government is consul ng with businesses to understand which organisa ons may require further support a er 31 March 2023, when the Energy Price Guarantee for business ends. In our Budget submission, we called on government to review the applica on of IR35 rules and clarify employment status for tax, because the off-payroll working rules are hard to understand. Plans to repeal changes introduced in 2017 and 2021 have been scrapped, but issues with IR35 remain. Now is the me for government to undertake a full review of IR35, establish the long-awaited Single Enforcement Body and introduce umbrella company regula on.

We await detail on the Investment Zones that Kwasi Kwarteng announced, but in our Overcoming Shortages report we called for more devolu on and collabora on at regional and local level. Local businesses, local authori es and local people are the experts in their areas.

That’s why we’ve asked government to expand Local Skills Improvement Plans across England and give more power over skills policy to devolved governments and regional mayors. Local recruiters can play an important part in those partnerships. If the government is commi ed to levelling up, it can’t be a postcode lo ery. Reforms and funding need to be widespread across the whole country.

Employers are in a difficult maze – and recruiters have the map to guide them, says Neil Carberry, REC Chief Execu ve

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the intelligence...

Futureproof your business in challenging mes

By Norah Song, Research Manager at the REC

As we enter the fourth quarter of 2022, employers’ confidence in the UK’s economy, and their ability to make hiring and investment decisions, con nues to fall. Job vacancies are also reducing as economic uncertainty increases. In many industries, the economic picture is troubling although, that said, the labour market remains strong.

Given rising in a on and interest rates, it is no surprise that hiring is cooling down a er the “sugar rush” caused by rapid recovery a er the pandemic lockdowns. Data from the O ce for Na onal Sta s cs suggests that there were 34,000 fewer job vacancies in June and August than in the previous quarter – the largest quarterly fall since June to August 2020. Nonetheless, there are s ll more job vacancies than before the pandemic, and the UK economy con nues to face labour and skills shortages.

In addi on, the unemployment rate in June to August 2022 decreased to 3.5%, the lowest figure since May to July 1974. The number of people unemployed for up to six months decreased to a record low, and the number of people unemployed for over 12 months also con nued to decrease. However, economic par cipa on is also falling – the economic inac vity rate increased by 0.4% to 21.7% in the same period.

According to the Bank of England, the current in a on rate is at 10.1%, and it is expected to peak at 11% in October. The cost-of-living crisis has been

3.5%

The unemployment rate decreased to 3.5% in the period June to August 2022.

exacerbated by a labour market that hasn’t been able to respond to the needs of the economy. Employers are offering higher wages to a ract job applicants, so higher costs are passed on to consumers. The economic outlook has le many businesses unsure about future developments.

The REC has produced pieces of research and prac cal guides to help businesses through the changes in the industry. Our recent publica on Futureproof your recruitment business provides a detailed guide to help your organisa on develop resilience and adapt in challenging mes. The REC is also publishing a series of guides on Employee Engagement to help businesses recruit and retain talent during future high-impact events. The economy may be unpredictable, but there are ac ons you can take to help your business through any forthcoming crises.

The latest edi on of the REC’s

10.1%

The current infla on rate is at 10.1%, according to the Bank of England.

annual Recruitment Industry Status Report 2021/22 also discusses some of the cash ow management issues that are challenging businesses. It will be published later this year and will deliver insights into how other organisa ons are adap ng to common challenges. It will also provide guidance on ways to manage uncertain es and shape the future of your organisa on. In the current economic climate, futureproofing your business is the key to staying compe ve in your market.

big talking point

Green shoots

ESG should by now mean something to everyone. If you are concerned about climate change, reducing waste and cu ng energy costs, that’s ESG. Suppor ng clients in their journey to achieve net zero and ensuring that you treat your customers fairly also falls under ESG.

And, increasingly, ESG means fulfilling legal obliga ons, from the type of power you use to statutory repor ng of carbon emissions. Further pressure comes directly from clients and, some mes, candidates. People want to know what a business is doing to reduce its carbon footprint, whether it is telling the truth, and how it is contribu ng to society.

Recruiters may not run blast furnaces or mine natural resources, but they are directly affected. At the very least, they have o ces, travel and energy use to monitor and account for. Then, recruiters provide services to organisa ons that need to report on their supply chains, so need answers that reassure their stakeholders. We are all connected in a big ESG chain.

“We have a two-pronged approach. The first is our own sustainability journey, from improving the accuracy and scope of our data collec on through to inves ng in the development and training of our staff and our associates, as well as making our o ces sustainable. The second, which

is equally important, is how we support clients in their green journeys,” says James Levey, Compliance Director at ManpowerGroup.

“Our clients expect us to have a sustainability agenda, so we need to be able to ar culate this. We also have a social contract with our workers, so must consider their career progression, and we have to s tch ESG into our governance structure. We must understand our data and engage with landlords and suppliers to report our own environmental impact – for example, we recently included the refridgerants in o ce hea ng systems and this increased our scope 1 emissions for 2021 repor ng.”

His firm is commi ed to reaching net zero by 2045, with a 60% reduc on in scope 1 and 2 emissions (ie. emissions from sources directly or indirectly controlled by the company) by 2030. Key ‘levers’ for this include using electric cars, increasing renewable energy in o ces, managing business travel and property more e ciently, decarbonising commu ng, and engaging with suppliers to reduce scope 3 emissions (those indirectly produced for the company’s ac vi es by others within its value chain). “It’s also about engaging hearts and minds,” Levey adds. “You can’t shi a problem elsewhere.”

Externally, recruiters can make an impact as advisers. Most sectors are s ll struggling with talent shortages, and ESG factors may be a differen ator for candidates. Recruiters hear their views

and can advise employers on how to become an a rac ve ESG proposi on.

There is also a rapidly developing range of ESG-related roles requiring people with skills that are currently scarce. These skills will be crucial to economic growth, and recruiters not only need to know where to look for them, but also what to tell clients who need them (o en for the first me). Employers may need help to understand what they need and what “good” looks like. Recruiters need to be one step ahead to provide this.

Mark Edwards, Chief Execu ve of engineering and technology recruitment firm SERT, is tackling both skills shortages and his firm’s social agenda by moving directly into providing training and appren ceships in green power and heat engineering. “We’re aiming to create the largest green army in the UK by upskilling people to install domes c energy systems and retrofit exis ng housing stock,” he explains.

“I’ve spent years in recrui ng in the engineering sector seeing how a lack of skills can set industries back by genera ons, and hearing people bemoan skills shortages, so it was the proudest

moment of my career when we decided to provide solu ons directly,” he says.

The drama c pivot was prompted by lockdowns, when a facility his company let to energy companies for training was suddenly empty. At the same me, experienced engineers were being put on furlough or made redundant. He saw an opportunity.

“Nearly all the firms training people to fit green energy systems are in the North West and the colleges that provided training were closed during lockdowns. We are near Portsmouth, where there is a lot of depriva on, and we saw a chance to train young people for a job that should last their whole lives,” he adds.

“We now have three centres – one each for gas and electricity, plus a renewable centre based in three classrooms at a local secondary school.”

The effect on local kids was inspiring, he adds. “We installed two heat pumps in the school. About 10 pupils walked in, looking unengaged. One asked how much he could earn installing a pump. I told him £40,000. I may as well have said he could be a premiership footballer – he came alive,” Edwards recalls.

Local employers are now asking

to upskill their teams and a housing associa on wants the firm to train its tenants. Edwards found the experience personally rewarding as well as profitable. “It’s knocked the edges off me, because it’s such a human story. It shows how recruitment can offer value and alignment with local society that extends beyond profits,” he says.

In addi on to frontline staff, businesses need experienced compliance o cers, risk managers, accountants and internal auditors who can evaluate green projects, monitor progress and ensure that regula ons are implemented. Others require PR and marke ng people who understand green or social ini a ves, and s ll more need people with skills in training exis ng staff, or people who can run social outreach programmes.

Legisla on is a key driver of change and recruiters should be one step ahead, thinking early about where demand surges will occur. The UK’s TCFD (Task Force on Climate-related Financial Disclosures) is already requiring about 1,300 premium-listed firms to report their performance against sustainability criteria. Others are being encouraged to do the same and it is likely that it will be extended. Companies will need people who can collect and manage data, understand their organisa on’s impact and report on it.

The ‘s’ of ESG is also developing fast. Next year, financial services companies will gain a new duty of consumer care. This will require them to prove that the products and services they offer are fair to customers and to assess and monitor the en re ‘customer journey’ end to end. This means from the algorithms that select products for par cular customers, to call centre staff and the support they offer.

Similarly, legisla on on data privacy, money-laundering and modern slavery looks set to become more comprehensive. These rules may become more complex if the UK takes a different approach to the EU, since those trading in both jurisdic ons will have to abide by all of them. One thing is clear. ESG is a growth area and recruiters are a vital part of the mix. There are opportuni es as well as responsibili es think about.

Employment law

legal update

Digital right-to-work checks:

By Rachel Davies, REC Solicitor

On 30 September 2022 the Covidadjusted right-to-work (RTW) checks ended. This was the temporary measure introduced by the Home Office during the pandemic to allow recruitment businesses to check a candidate’s iden ty documents remotely. It was widely welcomed by the industry, and many hoped it would become a permanent feature of the statutory right-to-work guidance.

However, the government decided to take a different approach and has introduced digital RTW checks. This provides an alterna ve method of checking, using the services of a third-party iden ty service provider (IDSP), which validates checks using iden ty valida on technology (IDVT).

At the same me, it streamlined the process

a

blessing or a curse?

for RTW checks for people of all other na onali es. Manual checks are no longer permi ed and instead should made online via the Home Office. The excep on is for applica ons pending or in appeal. This last change simplified a previously cumbersome process, but can the same be said for the introduc on of digital checks?

IDVT requires a candidate to hold a valid Bri sh or Irish passport. Those without this will need to be checked manually, which is problema c if the employment business and candidate are geographically far apart. This also places people on lower incomes at a disadvantage, because sta s cs show they are less likely to hold an in-date passport. Having to a end the employment business’s offices in person, or post their

documents, creates an extra cost for the candidate who needs to prove their RTW. It could be argued that some Bri sh and Irish ci zens could become more difficult candidates to onboard than their overseas counterparts who can be checked via the Home Office’s online service.

IDVT also creates a cost for the employment business. Fees differ from supplier to supplier and, depending on how many checks are conducted, these could run into hundreds if not thousands of pounds. This will make a sizeable dent in the employment business’s bo om line.

The changes are not all nega ve. Digital checks undoubtedly create benefits – they increase the poten al for na onal recruitment in the same way that the adjusted checks did. They may well also save me, allowing consultants to focus on more profitable ac vi es.

It is also true that IDVT significantly reduces the risks associated with fraudulent documents; a huge advantage when considering the poten al financial and criminal penal es that these expose employment businesses to. However, this liability will remain even when using an IDSP, so it’s important to choose a supplier carefully, paying par cular a en on to the level of checks they provide. The safest op on is to use a cer fied IDSP. The REC currently has business partnerships with two of these, Amiqus and TrustID.

While it is too early to assess the impact and future of RTW checks, more work needs to be done to ensure the system is fair for all, regardless of their na onality.

Tips for growth and preparing for economic challenges ahead What I know Q&A

Weir is Director of Op ma Site Solu ons Paul Springall is MD of Eurobase People

Pivot quickly. We’re celebra ng our 20th anniversary this month with our staff and their families and one reason for our success is that we’ve always pivoted our service in response to regulatory challenges. We’ve focused on what we do well –supplying blue-collar construc on workers in the UK – while evolving and adap ng when necessary.

Technology is key. When the business launched we had a Rolodex ‘system’. Now our tech stack incorporates CRM with our integrated pla orm that automates and records all the basic checks before we engage the contractor. We offer our clients full transparency of their supply chains, including

S44 determina on (should the Single Enforcement Body come knocking). This removes the burden of compliance, allowing consultants to do what they are skilled at.

Prepare for challenging mes. Further automa on will be essen al. We need to be in the best place to deal with challenges such as rising costs. Some of our tradesmen are earning 50% more than in 2019 and we’re paying our newest office trainees 15% more basic salary than this me last year. It’s also important to value your people and let them make decisions. Almost half our team of 38 have been with us for more than six years, and six people have been with us for more than a decade.

You are growing. Is business booming? We’ve doubled our headcount in the past year. A er the first Covid lockdown, the tech market accelerated. It’s exci ng working with organisa ons across Europe and the UK that are building innova ve products.

Is economic uncertainty damping demand? It’s slowed down. Some clients paused projects in the summer – although many have re-started. Candidates are also being selec ve. We have a responsibility to try to ensure that we offer them roles in robust companies. The market for our candidates is s ll excep onally ght and most can expect mul ple offers and counter-offers – and the scale of these counteroffers is astounding.

Economic pressures may affect this, but we advise candidates to expect counter-offers and think in advance about their response.

What do candidates want?

Most companies are thinking about what they offer. More are promising experience and leadership opportuni es and packages that include training. Wellbeing is a bigger issue than ever. Companies have to be more proac ve and flexible. This doesn’t always mean homeworking. We’ve found in our own team that younger workers benefit from being together, sharing stories and learning by osmosis. We’ve hired 11 starters recently and it’s been great seeing them together in the office. It’s hard to replicate the buzz at home.

Antony

New courses

If a client or candidate started talking about IR35, would you feel confident having that conversa on? Whether you supply PAYE agency workers, limited company contractors, umbrella workers, or a combina on of all three, a great temp recruiter needs to know the requirements when it comes to compliance.

Recruitment essen als: Successful Account Management (One day)

This course is aimed at consultants who are currently working with large accounts and are looking to build on their established rela onships, or consultants new to account management.

• Understand what successful account management is all about.

• Iden fy why customers stop buying from their compe tors.

• Understanding the value of compe tor knowledge in a mul -supplier rela onship.

• Iden fy value-added service and the meaning of value to your key customers.